New Jersey Senate: Who's responsible for high oil prices?

a clear difference (4.00 / 1)

Lautenberg misspoke (or was way off the mark) when he accidentally confused barrels and gallons of oil in a recent nationwide broadcast.

That's kind of  a big deal when you're voting on this issue (or going on a national broadcast to rebut the president.)

Secondly  (for anyone looking to get wonky wit it) Andrews has spoken extensively on this issue of speculation and its effects on the prices of home and car oil.  See for yourself:

activist for hire.

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by: Jay Lassiter @ Thu May 15, 2008 at 11:31:55 AM UTC

a clear difference (4.00 / 4)

I wasn't planning to bring this up, but since it's okay to take cheap shots, only one candidate thinks invading Iraq is a good energy policy. That's kind of a big deal when lots of people die for something that makes absolutely no sense at all:

"I think the best short-term energy policy is to remove Saddam Hussein from power in Iraq." -- Congressman Rob Andrews, Fox News Channel, April, 2002

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by: Juan Melli @ Thu May 15, 2008 at 12:34:33 PM UTC

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Bingo!!! n/t (0.00 / 0)

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by: Nick Lento @ Thu May 15, 2008 at 12:52:46 PM UTC

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An Excess Profits Tax is In Order... (0.00 / 0)

The petrochemical industrial complex is ripping us all off.

Think Enron.

It's the same crap all over again.

The actual price of gas/oil at retail is truly where it SHOULD be....but half of that price should be being collected by an honest government that used all the money to subsidize hybrid and all electric vehicles along with energy conservation across the board.

America could cut it's consumption of petrochemicals by 50% IF we made it "the moral equivalent of war".

We have ZERO need for oil from the middle east.

The way to get India and China et al to become truly conservative/efficient/clean is to set a radical example for them.

Prices will always be high on oil; the question is; who gets the money?

Both Lautenberg and Andrews have miles to go on this issue.

Meanwhile the trillion dollar PIC (Petrochemical Industrial Complex) continues to make massive campaign "contributions" that in effect BUY our government's policymakers/lawmakers.

Wake up folks, we're being fleeced.

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by: Nick Lento @ Thu May 15, 2008 at 12:00:32 PM UTC

Oil (4.00 / 4)

I do not claim any expertise in the area of oil. All I know is what I read in the papers. Congressman Andrews is semi-correct - about 1/2 of the current increase in the price of oil - say $30 worth of the run-up from $60 to $120 - is due to speculation, but it's not the reason for the entire rise in price. Demand is the primary reason. And the status of demand in the US - while is diminishing (somewhat) for domestic transportation but not really for power generation, plastics or drug manufacturing - isn't the real cause of oil prices rising. The real reason is increased demand in China and India and elsewhere in the developing world, coupled with a static level of crude production and supply interruptions due to strikes in Scotland, unrest in Nigeria, and other events.

In the US, refinery capacity is a bottleneck - refined gasoline is scarce and more expensive partially because we can't covert the crude to gasoline fast enough. Finally, about those 25 Iranian tankers storing heavy crude - only a very few American refineries (Valero, the old Exxon/Esso Bayway in Elizabeth, being one of them) is equipped to crack heavy crude into gasoline. Most gasoline refineries can use only light sweet crude, that lovely North Sea variety (remember the strikes in Scotland). Heavy crude is used for fuel oil - which we didn't use as much of this warm, warm winter and which we will again have a demand for in, oh, around the third quarter of this year, as the article states. (mysterious tankers off the coast brimming with oil is rather redolent of rumors rife during the 1979 oil crisis, but hey, if it's in the WSJ then it MUST be true ... )

There are really a whole kaleidescope of causes and effects that determine the price of gas at the pump, but the general trend is upward, regardless of whatever legislation is effected to curb speculation. And that's a GOOD thing    - note the rapidity with which  GM and Renault/Nissan are developing plug-in EVs.

The incentive to get off dinosqueeze is increasing all the time, and I for one welcome it. Even it if means (and it does) that I have to move to (gasp!) Philadelphia to get closer to work. It's going to be a bumpy ride, folks - but not a fatal one. But we're only halfway to European prices, and we're going to get some serious cognitive dissonance on our trip to energy reality. (Like, Hummer lawn ornaments).

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by: denniscmcgrath @ Thu May 15, 2008 at 12:09:41 PM UTC

Article from the Guardian about those tankers (0.00 / 0)

Note that the problem is, the Iranians can't sell the hard-to-crack heavy crude at the prices they're asking. It's not that they are stockpiling it and gleefully rubbing their evil hands together while they cackle gleefully:

http://www.guardian.co.uk/busi...

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by: denniscmcgrath @ Thu May 15, 2008 at 12:19:11 PM UTC

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COLLINGSWOOD DENNIS!!! (0.00 / 0)

Philly?  what?!  get on that highspeedline and get a cute place in collingswood, haddonfield, et al and have cheap and reliable access to center city philly and beyond.

the round trip ticket is about the same as the easy pass toll afterall.

activist for hire.

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by: Jay Lassiter @ Thu May 15, 2008 at 12:24:42 PM UTC

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Yes, I know ... (0.00 / 0)

I've spun Collingswood around mentally. The problem is the commute. I don't work downtown; if I took the highspeed (20 minutes not counting walk to station)  I'd still have to get a regional train from 8th and Market to get the nearest station to work (40 minutes), and then walk 20 minutes from there to the job, whereas I can easily find an a affordable apartment in under ten minutes walk from the job. The choice is obvious.    

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by: denniscmcgrath @ Thu May 15, 2008 at 12:38:06 PM UTC

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Plug In Hybrid Tech May Get You To Work.... (0.00 / 0)

...and back with zero need for gasoline.

Especially, if there was a way to plug in at/near your job.

That's the way to go in general.

I bet 99% of American's daily drive is less than 75 miles each way....easily within the range of an efficient battery operated car.

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by: Nick Lento @ Thu May 15, 2008 at 12:55:56 PM UTC

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That would be lovely Nick (0.00 / 0)

if I could afford a new car. If I could afford a new car, it wouldn't be a plug-in unless the $8-10 thousand difference between it and a 'penalty box' ICE car is narrowed considerably.

I'm thinking used Nissan Versa with a CVT when the Subaru finally craps out, but I don't anticipate that happening for another seven or eight years. I typically keep cars well over 200,000 miles, and I eke out 27 mpg in mixed city/highway driving in a 1996 Legacy wagon with AWD by driving with care, at the speed limit, and keeping my tires a little more inflated than the manufacturer recommends. I do very little joy riding. I go 4 1/2 days on 14 gallons. When gas finally hits $4.50 per gallon, it will then be cheaper for me to buy the monthly SEPTA transpass I'd need to take discounted mass transit to work, but  I probably won't even then, as it's 1 hour by car, 2 1/2 by rail and walking. The time getting into center city and back out again is prohibitive.

There are very few clear cut choices we can make other than to use less, however one defines it. Google Juneau, Alaska energy crisis, they're having a very instructive utility problem up there if you want a taste of the future.

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by: denniscmcgrath @ Thu May 15, 2008 at 13:17:25 PM UTC

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Powerdown Juneau (0.00 / 0)

http://www.msnbc.msn.com/id/24...

This could be your town, your life, real soon ... you'll manage.  

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by: denniscmcgrath @ Thu May 15, 2008 at 13:38:23 PM UTC

[ Parent ]

I'd say (4.00 / 1)

Jonathan Taplin doesn't know as much as he thinks.

Iran is storing "heavy crude" because no one wants heavy crude.  Heavy crude is petroleum with a high specific gravity - usually because it holds a lot of impurities, particularly sulfur.  The refining costs are astronomical.

This is not a new development - it happens periodically:

Iran has managed to sell millions of barrels of oil it was storing at sea because of a lack of buyers, officials said on Wednesday, and a newspaper reported Royal Dutch Shell and India had taken most of it.

snip

Oil traders in the Mediterranean said Iran must have offered the crude at a discount as refining margins for heavy, sour crude are poor. The crude is difficult to convert into transport fuels, much in demand during the summer driving season.

"The quality of this crude is very bad," said one trader. "I imagine they must have sold it at a big discount (to sweet crude benchmarks) to move so much of it."

All oil is not created equal - or sold as such.

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by: Thurman Hart @ Thu May 15, 2008 at 12:21:55 PM UTC

What to do when everyone is right? :-) (0.00 / 0)

Speculation is a large part of the price runup.  Unfortunately, so is demand (at least demand for sweet crude that can be made into "environmentally sensitive" gasoline--thanks Thurman!).  OPEC is a cartel.  

Lautenberg is actually adopting the idea of the presidential candidate that Andrews has endorsed:  Hillary Clinton.  However, US antitrust law doesn't extend to the Persian Gulf.

The real long-term solution is to use less by being more efficient.  If our automobiles (including SUVs and light pickups) got an average of 30-35-40 MPG, that would make a huge difference.

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by: Creed Pogue @ Thu May 15, 2008 at 12:54:48 PM UTC

Re (0.00 / 0)

Speculation is part of the market.  Oil contracts are sold for delivery six months from the day of sale.  Everyone speculates on the price oil will be in six months.  The alternative would be to meet all demands  on the spot market - which would really drive the price sky-high.

So long as the spot price remains above the expiration price, speculation is not really driving things overly much.  No one is having trouble selling or buying on the spot market.  That's a pretty healthy indication for the market.

Efficiency should be seen as a mid-range solution.  Increases in efficiency take about a decade to be felt throughout the on-the-road fleet.  The long term goal is to realize that whatever we burn will cause some sort of exhaust and that exhaust will cause some sort of negative reaction in the environment - even if it's "only" water vapor (go see the Grand Canyon is you think water is benign).  

Long term, we have to rebuild our cities so people can walk to work rather than take even mass transportation.

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by: Thurman Hart @ Thu May 15, 2008 at 18:58:47 PM UTC

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Peak Oil (0.00 / 0)

FYI - here's the peak oil argument:

http://www.truthout.org/docs_2...

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by: SmartyJones @ Thu May 15, 2008 at 13:00:26 PM UTC

it's the economy stupid (0.00 / 0)

There is a very high correlation between the value of the dollar and price of crude.

It's our weak economy, stupid.

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by: Juan Melli @ Thu May 15, 2008 at 13:07:31 PM UTC

to clarify a little... (3.00 / 1)

If you control millions or billions of dollars and expect that the value of the dollar will go down in the future, you might see oil as a good place to put your money. Our economic policy and soaring debt doesn't give many people faith that the dollar will strengthen any time soon.

Regulating the commodities markets is addressing the symptom but not the root cause of the problem. Our economy needs a major overhaul. The war spending needs to end. The massive deficit spending needs to end. Andrews says he would repeal the tax cuts for the wealthy and use about $1 trillion to start paying down the debt. I think that's the type of thing that will fix the economy and curb speculation.

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by: Juan Melli @ Thu May 15, 2008 at 13:36:17 PM UTC

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